The matter I raise on the Adjournment is the need for the Minister for Finance to delay the sale of ICC Bank because there is only one bidder, a motion I put down yesterday. Today a statement issued from the Department of Finance saying that the Minister's preferred bidder was the Bank of Ireland. That is, to say the least, an extraordinary statement because there is only one bidder and that is the Bank of Ireland. For the Minister to say it is his preferred bidder when he has only one choice is unusual. Nevertheless he is left in a very difficult situation because if one is putting something up for sale, even if it is a State bank, and nobody wants to buy it, one has to sell it to the only bidder. This is the principal reason he should delay it.
Every other bidder or potential bidder for the ICC Bank, a State asset which we have been led to believe is a jewel, has withdrawn for reasons which are not quite clear. A figure of £300 million has been mentioned as the value of the ICC Bank. It is quite apparent now that because the Minister and the State is in a weak position and that there will in effect be no auction, that the value which was placed on it will not now be achieved and the Bank of Ireland will have the State in a corner. It will look like a fire sale, a forced sale. As a result the Minister should withdraw this sale for a period which he thinks suitable. That should be left to his discretion, maybe six months or more.
It is a bad time to sell banks in Ireland and a particularly bad time to sell the ICC. It is a bad time to sell banks mainly because banking in Ireland is going through a difficult period, not a consolidation period as is happening elsewhere. The share value of Bank of Ireland and AIB on the stock market and therefore the value of the companies as well, has fallen by over 20 per cent this year and up to today was still falling. They may have gone up today. Therefore the climate for the sale of a State bank, which obviously has to be considered part of the banking sector, is now wrong and the Minister's weak position is undermined further by the stock market position of the major banks.
Even though this is no longer an option, and it is not an option, the Bank if Ireland is a particularly unsuitable purchaser in the public interest for the ICC Bank. To sell it to the Bank of Ireland will mean that there is less competition, not more, in the Irish banking market. The Bank of Ireland has a near monopoly or certainly has a dominant position in much of Irish banking and is easily the biggest retail bank in Ireland. If it gets possession of the ICC which is, after all, a leader in the small and medium size business lending market it will probably become dominant in another area.
The Bank of Ireland is already the owner of the biggest stockbroker and has bought New Ireland Assurance Company. It owns Lifetime Assurance as well. It is the second largest player in that area. It owns the Irish Civil Service Building Society. It is the biggest merchant bank, the biggest corporate finance bank, the biggest fund manager with Bank of Ireland Asset Management. To allow it to buy yet another important ingredient of the financial world would be extremely dangerous for Irish banking where we are seeing in other areas, hopefully, the breaking of the cartel by the Bank of Scotland. This would go completely against the trend.
The Minister's instincts are that the State should be out of banking and I thoroughly agree with him on that. I do not think the State has any business to be in banking at all but it does not really excuse a fire sale in a very difficult situation where this asset can be picked up for less money than it would have been picked up for six months ago and will be picked up for in the future. The Minister has a duty to the taxpayer. The result of the process, which has been long and tortuous – the ICC has really been up for sale since 1992, if one is honest about it – is that everybody else has withdrawn and it has not worked out as the Minister had expected. He is not going to get any other bids. The logical thing to do on behalf of the taxpayer and the State and in the interests of competition in the banking sector is to delay it until a real option is found. This is a rare shambles in the Department of Finance which normally runs these matters particularly well. It is unlucky but it is a shambles. The last thing we should do is cheat the taxpayer out of money by selling ICC Bank to an unsuitable buyer at the wrong time.
Minister for Arts, Heritage, Gaeltacht and the Islands (Miss de Valera): As the Senator may be aware, the Government decided on 27 July 1998 to dispose of the State's interest in ICC Bank and authorised the Minister for Finance to enter into negotiations with staff on an employee share option scheme of up to 5 per cent of the State's shareholding in return for a change in the bank and on the purchase of a further 9.9 per cent stake by the staff, on the lines of arrangements agreed in Telecom Éireann.
By way of background, the Minister would like to explain to the House the progress that has been made in relation to the disposal of the bank. Last February, following a competitive process, he appointed ABN-AMRO and McCann FitzGerald to advise him on the corporate finance and legal aspects of the sale of his interest in the bank. During the following months, officials of the Department and his advisers worked with the board, management and staff of ICC Bank to prepare the necessary documentation on the sale process, to negotiate an ESOP and to agree procedures for the sale. On completion of this phase of the process, expressions of interest in acquiring the State's remaining shareholding were sought by advertisement on 12 July 1999.
While up to ten banks expressed an initial interest in acquiring the bank, only three firm indications of interest were received on the closing date of 23 August. Having reviewed these tenders, it was decided that all three should enter the second stage of the sale process where they would be permitted to carry out due diligence on ICC. One of the banks withdrew from the sale process prior to engaging in preliminary due diligence. The two remaining banks undertook a preliminary due diligence exercise on ICC Bank and also availed of the opportunity to meet with key management and union officials. Subsequently, one of the remaining banks withdrew from the sale process and one final bid was received by the deadline of 19 October 1999 from Bank of Ireland. While the Minister is disappointed that only Bank of Ireland proceeded to the final stage of the bidding process, he feels it is only fair and reasonable that the bid received should be given due consideration. In this regard, he has consulted with the ICC board and received advice from his financial advisers.
As a result of these consultations he had further discussions with the bidder concerned, Bank of Ireland, and today issued a press release confirming that bank as the preferred bidder. Bank of Ireland will now arrange to undertake the final due diligence process. When this exercise has been completed, and the Minister has further consultations with the ICC board, he intends to bring proposals to Government for its consideration. The Senator will appreciate that the Minister is not in a position to make any further comment on the matter and does not think it would be appropriate to do so at this time. However, in arriving at his final proposals for Government, he will take into account the long-term interest of all the stakeholders – the company, staff, customers, suppliers and shareholders.
